The European Automotive Industry is a leader in the global automotive market, with integrated automobile operations that combine research, design, development, production and sales. It has a dense worldwide network of joint ventures, production and assembly sites. EU exports of motorcars reached € 76 billion in 2010, with a 58% increase over 2009. The main five regions vis-à-vis which the EU has a surplus are the NAFTA and EFTA countries, China, the Russian Federation and the Middle East. While Japan is the sixth largest destination of EU motor cars exports, EU’s biggest car trade deficit originates in this country, as the EU imports about four times as many cars as it exports. Other trading partners vis-à-vis which the EU trade balance reveals a significant deficit are South Korea, India and Turkey. Total automotive exports (including also buses, trucks, components, etc.) represent about 10% of the value of total EU exports.

Global production of automotive is broadly shared between Europe, the Asia-Pacific region and North America. South America, Africa and the Middle East also have some limited production. In Europe the automotive sector directly employs over 2 million people, and indirectly supports about 10 million jobs in other industries. The health of the sector affects roughly 8% of the EU’s active workforce. The industry, which is active in many EU Member States and operates a dense network of supplier industries, was hardly hit by the global crisis. Since 2010, the economic recovery improved the general market situation, in particular for export markets. Conversely, the EU market for new passenger cars declined by 5.5% that year (13.3 million units registered), due to the ending of government fleet renewal schemes in many EU countries.

Fostering European automotive exports and investment through improved market access is an EU trade priority. The EU seeks to do this by negotiating the removal of barriers to automotive exports both multilaterally in the WTO and bilaterally with our major trade partners.

Although high tariff barriers still seriously hamper market access for EU exporters in Asia and India, it is often non-tariff barriers ‘behind the border’ that effectively ban EU vehicle exports to the South East Asian, Chinese, and South American markets. These barriers can include burdensome and discriminatory certification requirements, additional testing requirements for EU exports, excise and luxury taxes that add on to the sales price of EU vehicles. Local content requirements and tax incentives for local producers are also applied to the disadvantage of EU exporters. Strict rules for joint ventures or majority owned foreign companies also hamper the activities of European companies. This type of trade barriers are the focus of the European Commission in improving trading conditions for the EU automotive sector.

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A History of Economic Cooperation

Canada and the EU have a long history of economic cooperation. Composed of 27 Member States with a total population of over 500 million and a GDP of nearly $16.8 trillion in 2010, the EU is the world’s largest single common market, foreign investor and trader. As an integrated block, the EU represents Canada's second largest trading partner in goods and services. In 2010, Canadian goods and services exports to the EU totalled $49.1 billion, and imports from the EU amounted to $55.2 billion.